Scotch Bonnett Realty Corp. v. Matthews
11 A.3d 801
| Md. | 2011Background
- SBRC certified a Maryland question on whether a deed signed under forged corporate amendments voids title ab initio or transfers good title to bona fide purchasers.
- Articles of amendment forged: a non-signed-forger signature on the amendment; Johnson authorized deed signed in true name, but forged amendment provided purported authority.
- Deed to Matthews executed December 21, 2005 in SBRC’s name by Corey Johnson (Officer); Matthews, a grantee, later sought to rely on bona fide purchaser status.
- Bankruptcy Court found forged amendment, not the deed itself, as determinant for title validity; assumed Matthews as bona fide purchaser for value.
- Maryland common law recognizes void/voidable distinction: forged deeds are void ab initio; deeds obtained by fraud may be voidable.
- Maryland high court ultimately held that forged amendment, while inducing the conveyance, does not render the deed void ab initio; good title passes to bona fide purchasers for value without notice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does a deed signed with forged amendment authority void the conveyance ab initio? | SBRC argues the forged amendment taints the deed as void ab initio. | Morgan argues the question is about the deed’s validity and forgery impact on title. | No; forged amendment does not void the deed ab initio. |
| Is a forged document under authority in a close corporation a true forgery requiring voidness? | SBRC contends forged authority constitutes forgery of the deed. | Morgan maintains the forgiveness/false pretenses distinction applies; not a forgery. | Not a forgery; not void ab initio. |
| Should Maryland follow Bettman/Baxter-style expansion of forgery to corporate amendments? | SBRC seeks broader forgery rule to invalidate conveyance. | Morgan argues against expanding forgery; public policy favors bona fide purchasers. | Not adopted; do not extend forgery rule. |
| What is the proper balancing with public policy favoring bona fide purchasers for value? | SBRC asserts risk to title stability if forged amendments taint deeds. | Court should preserve title stability for good-faith transferees. | Protect bona fide purchasers; do not void title due to forged amendment. |
| Does the forged article influence the ultimate title result under Maryland law? | Forgery of amendment indirectly taints transaction. | Connection inadequate to void deed ab initio under Maryland law. | Deed remains valid for bona fide purchasers. |
Key Cases Cited
- Harding v. Ja Laur Corp., 20 Md.App. 209 (Md. Ct. App. 1974) (distinguishes fraud in the factum vs. fraud in the treaty; voidable vs void disputes in title)
- Maskell v. Hill, 189 Md. 327 (Md. 1947) (forgery vs void title in recording context)
- Reese v. State, 283 Md. 86 (Md. 1978) (forgery vs misrepresentation of authority; false pretenses concept)
- Gilbert v. United States, 370 U.S. 650 (U.S. 1962) (authority vs genuineness; not forgery when signing under authority misrepresented)
- State v. Reese, 283 Md. 86 (Md. 1978) (forgery/falsity of execution vs authority; classic forgery analysis)
- United States v. Hunt, 456 F.3d 1255 (10th Cir. 2006) (non-forgery authority issues in signature cases)
- Julian v. Buonassissi, 414 Md. 641 (Md. 2010) (confirmed bona fide purchaser protection where deed not void ab initio due to statutory considerations)